BAE Systems, a British multinational defense, security, and aerospace company, has landed a £2.4bn ($3.2 billion) contract for the supply of weapons to the UK Ministry of Defence (MOD).
The UK Awards A Whopping $3.2B Contract T BAE Systems To Develop Next-Gen Munitions
The company claims the contract would sustain approximately 4,000 jobs across the UK, at a time when the Covid-19 pandemic has resulted in massive job losses across the globe.
Soon after the announcement, the company’s shares surged higher. The agreement will supersede the current contract due to conclude at the end of 2022 and guarantees the delivery of munitions products and engineering support to the UK military.
The contract called the ‘Next Generation Munitions Solution’ (NGMS) is due to commence in January 2023 and will succeed the current ‘Munitions Acquisition, the Supply Solution’ (MASS) contract, which came into effect in 2008.
According to the company, it employs 1,260 people in either munitions manufacturing or test and evaluation at five sites across the UK — Glascoed in Monmouthshire, Radway Green in Cheshire, Washington in Tyne & Wear, Bishopton near Glasgow, and Ridsdale in Northumberland.
The new contract will “help sustain a further 1,500 jobs in the UK supply chain and support a further 1,300 jobs induced by consumer spending in economies local to sites”.
Coming as a shot in the arm amid “worst recession in more than 300 years”, Bae Systems will give preference to UK-based companies while spending up to £350m on raw materials and machine components.
The government has said that the contract – announced just days after its pledge for an enhanced defense budget – would prove additional support as the industry battles the coronavirus disruption and Brexit uncertainty.
UK Defense Minister Jeremy Quin has said the “vital multi-billion pound contract will provide our service men and women with firepower on the front line for years to come whilst investing in British industry, British jobs, and British infrastructure”.
He underlines that defense provides hundreds of thousands of jobs across all four corners of the nation, and ongoing investment is crucial in view of the slowdown in the economy due to the Covid-19 pandemic.
Earlier in November, Britain announced its biggest military spending increase at £16.5-billion ($22 billion) since the Cold War, pledging to end the “era of retreat” as it seeks a role in the world after Brexit. It has also been indicated that the revised defense expenditure would contribute about 10,000 jobs a year.
The UK government is grappling with the fallout from the pandemic, which has hit its economy harder than most other rich countries, and amid forecasts that unemployment is likely to peak at 7.5%, a Reuters report has said.
As per the Legatum Institute, a think tank, almost 700,000 people in the UK, including 120,000 children, have been pushed into poverty as a result of the economic crisis
Charles Woodburn, chief executive of Bae Systems, the UK’s largest defense company, has said that the contract secures the future of a highly technical and critical industry which supports thousands of manufacturing jobs in several areas throughout the UK.